[amp_mcq option1=”Life insurance policies are contracts of indemnity, while general insurance policies are contracts of assurance” option2=”Life insurance policies are contracts of assurance, while general insurance policies are contracts of indemnity” option3=”In case of general insurance, the risk event protected against is certain” option4=”The certainty of risk event in case of general insurance increases with time” correct=”option2″]<\/p>\n
The correct answer is: B. Life insurance policies are contracts of assurance, while general insurance policies are contracts of indemnity.<\/p>\n
A contract of indemnity is a contract in which one party agrees to reimburse another party for any losses that they may incur as a result of a specific event. A contract of assurance is a contract in which one party agrees to pay a sum of money to another party upon the occurrence of a specific event, regardless of whether or not the insured party suffers any losses.<\/p>\n
In the case of life insurance, the insured party pays a premium to the insurer in exchange for the promise that the insurer will pay a death benefit to the insured party’s beneficiaries upon the insured party’s death. This is a contract of assurance, because the insurer is obligated to pay the death benefit regardless of whether or not the insured party suffers any losses.<\/p>\n
In the case of general insurance, the insured party pays a premium to the insurer in exchange for the promise that the insurer will pay a sum of money to the insured party if the insured party suffers a loss as a result of a specific event, such as a fire, theft, or accident. This is a contract of indemnity, because the insurer is only obligated to pay the insured party if the insured party suffers a loss.<\/p>\n
C is incorrect because the risk event protected against in general insurance is not certain. For example, the risk of a fire occurring is not certain.<\/p>\n
D is incorrect because the certainty of risk event in case of general insurance does not increase with time. The risk of a fire occurring, for example, is not more certain to occur tomorrow than it is today.<\/p>\n","protected":false},"excerpt":{"rendered":"
[amp_mcq option1=”Life insurance policies are contracts of indemnity, while general insurance policies are contracts of assurance” option2=”Life insurance policies are contracts of assurance, while general insurance policies are contracts of indemnity” option3=”In case of general insurance, the risk event protected against is certain” option4=”The certainty of risk event in case of general insurance increases with … <\/p>\n